by Diana Mandia

(Reuters) – European scholarships ended up on Tuesday, investors betting on a sharp increase in defense spending in Europe and hoping that the German elections scheduled for this weekend will lead to a resumption in the greatest economy in the euro zone .

In Paris, the CAC 40 ended on an increase of 0.21% to 8,206.56 points. In Frankfurt, the Dax took 0.29% and in London, the FTSE 100 finished almost stable (-0.01%).

The Eurostoxx 50 index won 0.39%, the FTSEURofirst 300 0.35%and the Stoxx 600 0.39%. The latter reached a historic record of 557.96 points in session.

The hope of a possible end of the war in Ukraine and its security implications for the European continent have again dominated the markets on Tuesday, investors betting on an increase in military spending of the twenty-seven which would particularly promote companies in the sector.

Tuesday, the European Commission reaffirmed its desire to soften the budgetary rules of the European Union (EU) in order to allow the member states to more easily increase their defense budgets, a project already mentioned by the president of the commission, Ursula von der Leyen last week.

Ukraine, which is entering its fourth year of war on February 24, did not participate in Riyad on Tuesday in a first meeting of the American and Russian delegations, during which Moscow hardened its requirements, but the markets are already calculating The benefits of a new scenario in the region.

“This means a massive budget transformation in Europe,” said John Hardy, a world leader in macroeconomic strategy at Saxo Bank. He says he expects the European Stoxx index outpacking Wall Street this year, while investors are also concerned about the impact of American customs duties, inflation and performance of technological values.

The market also turns to the week’s political event in Europe, the anticipated legislative elections in Germany on Sunday, which will take place in a context of increasing pressure to revive a stagnant economy and allow more expenses to stimulate activity.

Piero Cipollone, member of the Management Board of the European Central Bank, however warned Tuesday that the economic growth of the euro zone could be lower than expected and that the block would continue to develop below its potential.

VALUES

The defense and aerospace sector continued its earnings on Tuesday (0.8%) after a leap of 4.6% on Monday, its highest increase in one day since the invasion of Ukraine by Russia in February 2022.

In Paris, Thales took 2.3%.

Capgemini, on the other hand, fell by 10% after reporting a decrease in annual turnover and announced prudent 2025 perspectives, which weighed in the technology sector (1.1%).

In London, IHG, owner of Holiday Inn, lost 4.7% after the publication of its annual results.

A Wall Street

At the time of the closure in Europe, the New York Stock Exchange evolves without management, investors remaining attentive to possible news concerning the customs duties of the Trump administration and assessing the projects of the American Federal Reserve in matters of Interest rate.

The Dow Jones lost 0.19%, the Standard & Poor’s 500 grapped 0.07%and the Nasdaq Composite gives way 0.03%.

The indicators of the day

In the United Kingdom, wage growth has accelerated over the three months to the end of December 2024, data showing that the labor market remains in good shape and which strengthen the prudent approach to reduction in rates of the Bank of England (BOE).

In France, the consumer price index increased by 1.7% over one year in January, while the economists interviewed by Reuters awaited an increase of 1.4% after 1.3% in December. The increase is explained by the acceleration of services and energy prices and by the rebound in manufactured products prices, the INSEE said.

In Germany, investor morale has increased more than expected since the beginning of February, at its fastest rate in two years, according to the monthly survey published Tuesday by the Zew Institute of Economic Studies, which attributes This optimism to the hope of a new government capable of acting to relaunch activity.

In the United States, the “Empire State” activity index came stronger than expected in February, suggesting that growth remains strong enough to complicate the Fed easing trajectory and while the markets are The lookout for all signals on American monetary policy.

Changes

The dollar earns 0.35% in the face of a basket of reference currencies, concerns about interest rates, customs duties and uncertainties surrounding any peace talks between Russia and Ukraine having stimulated appetite For refuge values.

The euro in turn loses 0.25% to 1.0456 dollars.

RATE

Bond yields ended up on a slight increase on Tuesday, those of long -term debt having reached their highest level for two weeks earlier in session, supported by the expectations that European governments will increase debt emissions to finance an increase Defense expenses.

The yield of the German Bund at ten years took a basic point at 2.4940%. The two years closed stable at 2.1340%.

In the United States, the yields of the bonds of the Treasury also increased after the publication of the “Empire State” activity index.

The yield of Treasuries at ten years takes nearly 4 base points at 4.5249%. The two years advances from 3.2 base points to 4.2908%.

OIL

Oil prices are increasing on Tuesday, supported by a drone attack against a Russian pumping station which could lead to a 30% drop in Brut exports in Kazakhstan.

Brent took 0.68% to $ 75.73 per barrel and American light crude (West Texas Intermediate, WTI) advances from 1.37% to $ 71.71.

(Written by Diana Mandiá, edited by Zhifan Liu)

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